February 6, 2008

Richard Williamson, The Bond Buyer

State lawmakers yesterday chastised the Texas Department of Transportation for blaming the Legislature for its funding crisis instead of admitting its own failures in planning.

"I think we have an agency in turmoil. We have an agency in chaos," said Sen. Judith Zaffirini, D-Laredo. "It is highly irresponsible to blame the Legislature for poor planning. This is at best intellectually dishonest, and I, for one, do not appreciate it."

Amadeo Saenz, executive director of TxDOT since last October, admitted problems projecting revenues, including a $1 billion error based on counting bond proceeds twice. But he told a joint meeting of the Senate Finance and the Transportation and Homeland Security committees that organizational problems that led to faulty figures have been fixed.

"A convergence of different circumstances exposed a weakness in our system," Saenz said in a prepared statement to the committees. "We lacked adequate communication between those in the department who plan projects, those who schedule projects for letting and those who pay the bills. To make matters worse, we failed to alert our local partners of the impending predicament."

The $1 billion error came last August when TxDOT estimated that it would have $4.2 billion available for contracts in fiscal year 2008 that began Oct. 1. The department's chief financial officer, James Bass, told the committees he heard the figure the same time it was reported to the public and knew immediately that it was wrong. When the figure was reduced to $3.1 billion, it appeared that there had been a cut in funding.

"A billion dollars, you counted twice?" asked an incredulous Sen. Steve Ogden, R-Bryan

"It's a disconnected planning process," Bass said.

To fix the problem, all departments involved in projecting funds available for letting contracts are now operating under Bass, according to Saenz.

The unusual joint committee hearing was called by Lieut. Gov. David Dewhurst, who wrote a letter to Hope Adrade, chairwoman of the Texas Transportation Commission that oversees TxDOT, outlining the questions he wanted answered.

Left out of TxDOT's planning process through 2015 were $3 billion of Fund 6 bonds passed in the last legislative session, $5 billion in voter-approved general obligation bonds approved by voters last November and $1.3 billion in Mobility Fund bonds, Dewhurst wrote.

Despite the billions in available debt, TxDOT deputy director Steve Simmons projected a $3.6 billion shortfall by 2015 and said money would have to be shifted from new road construction to maintenance, Dewhurst noted.

Saenz told the Senate committees yesterday that, while TxDOT might have funding to start projects in 2008, it could not guarantee adequate cash flow to complete the projects based on factors such as construction inflation and declining federal revenues. As a result it has not given out contracts for several expected projects.

"If I don't make good projections, people will gear up to do work and the projects will have to come to a stop," Saenz told the committees.

"You could have asked us to come up with solutions to these problems instead of just deciding on your own to stop these projects already in the pipeline," said Sen. Juan Hinojosa, D-Mission.

Saenz replied that the numbers showing the shortfall did not become available until after the legislative session ended May 30.

"I know that everyone was affected," Andrade said. "But the worst thing we could have done was let those contracts out."

Sen. John Carona, R-Dallas, questioned the need to shift funding from new construction to maintenance, given the fact that 86% of Texas roads were rated "good or better." Some lawmakers have accused TxDOT of seeking to sandbag them into approving private financing of toll roads as a solution to the crisis by cutting off funding for new construction.

Ric Williamson, late chairman of the TTC who died suddenly last year, was the leading advocate of Gov. Rick Perry's policy of using private funding for tollways as an alternative to tax-financed roads.

At a later hearing, Carona chaired the first meeting of a special committee studying the issue of private financing of toll roads. The meetings were prescribed by SB 792 that placed a two-year moratorium on new public-private toll partnerships.

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